Supermarket Income (SUPR) has launched its second share offer of this year, aiming to raise £50m from a placing to institutions and an offer to retail investors. The £1.1bn company, which owns a £2.2bn portfolio of 140 stores in the UK and France, has six transactions involving 12 assets in its sights. These will cost £65.2m and will be earnings enhancing with an average net initial yield of 7.3% and unexpired lease term of 12 years. Two of the transactions are with Sainsbury’s and include a portfolio of seven convenience stores worth £19m and a £47m distribution centre in Darlington in which SUPR would provide £23.5m. The issue follows a £100m fund raise in July which the real estate investment trust invested in six weeks. Annual results in September showed the company outperformed the market in the year to 30 June with a 2.5% like for like valuation increase and a low EPRA cost ratio of 9.2%. At 83.9p, SUPR stands on a small discount to 87.5p of net tangible asset (NTA) per share at the financial year-end. Chief executive Rob Abraham said: “Having successfully deployed the proceeds of our July fundraising, we are now capitalising on a further pipeline of high quality, earnings-enhancing acquisitions … They represent an important step towards our ambition of doubling the size of the portfolio and delivering long-term returns for shareholders.” 

QuotedData senior analyst Richard Williams said: “SUPR is wasting little time putting its growth ambitions into practice, returning to shareholders for another £50m just four months after raising £100m in July. Encouragingly, the proceeds of that earlier fundraising were deployed within six weeks, and the latest pipeline offers an attractive average acquisition yield of 7.3%, comfortably above the portfolio’s existing 6.1%. The proposed Sainsbury’s distribution centre acquisition looks particularly interesting, increasing its exposure to grocery-let big box logistics assets. The move into smaller convenience stores also broadens SUPR’s exposure further beyond its traditional large-format supermarkets. The acquisitions should enhance earnings per share from the first full year, with minimal NTA dilution, although the final issue price will be important in assessing the economics for existing shareholders. Nevertheless, the ability to raise fresh funds for identified, earnings-accretive investments is an encouraging indication of investor confidence in SUPR’s strategy.”